Calculating bank holidays for part-time and compressed hour workers

With the next August public holiday on the horizon, we look at what can be a complicated area in calculating bank holiday entitlement for individuals who work part-time and/or on compressed hours.

Under the Working Time Directive (WTD), which is now retained EU law, a worker has the right to a minimum of 4 weeks’ annual leave (or 20 days for a full-time worker).

The Working Time Regulations 1998 (WTR), which implement the WTD into UK law, provide an additional 1.6 weeks’ annual leave (or 8 days for a full-time worker), representing the public holidays observed in England and Wales in each year.

In total, therefore, a full-time worker is entitled to 5.6 weeks leave each leave year but there is no statutory right to time off, paid or otherwise, on a public holiday.

Entitlement to paid time off on a public holiday will ultimately be governed by the employment contract. Traditionally, employers provide full-time workers with 20 days plus the 8 recognised public holidays in England and Wales as their holiday entitlement for each leave year.

The position in relation to holiday entitlement is relatively clear for full-time workers. However, in light of the changing face of how the workforce now operates, many employers are faced with workers working either part-time or compressed hours.

Part-time and/or compressed hour workers who do not work on a public holiday run the risk that they receive proportionally fewer days annual leave than a full-time worker. This then raises the question of how holiday entitlement is calculated for those on these working patterns?

Managing public holiday entitlement for part-time workers

Employers must ensure workers receive at least the statutory minimum annual leave entitlement. The WTR do not deal with whether an employer should give time off in lieu for missed public holidays. It is, however, the case that those who work part-time should not be treated less favourably than a comparable full-time worker under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, unless such treatment can be objectively justified. If an employer is paying full-time staff not to work a public holiday, then part-time staff should be entitled to a pro-rated public holiday entitlement to avoid any claims of less favourable treatment.

Government guidance on pro-rating public holidays has previously been to apply a generous interpretation. For example, a worker who works 3 days a week would receive 3/5ths of 8 days, or 4.8 days, added to their ordinary holiday entitlement which is then allocated to taking leave on public holidays, resulting in employers providing enough annual leave allocated to public holidays to prevent the need for ordinary holiday (under the WTD) to be used on those days. This seems to stem from an overly cautious position to avoid any perceived less favourable treatment arising from part time status.

However, questions often arise where there are part-time staff who work two days a week but not on a Monday or Friday compared to another part-time worker whose working pattern does include these days.

Examples:

1. Worker A works three days a week, Tuesday to Thursday. Worker A should be given a pro-rata entitlement to public holidays as part of their annual leave entitlement but can take their annual leave when they choose since very few public holidays will fall on their working days.
2. Worker B works two days a week on Monday and Friday. Worker B should also be given a pro-rata entitlement to public holidays as part of their annual leave entitlement but will be required to deduct annual leave for any public holidays which fall on a Monday and Friday from their annual leave entitlement.
3. Worker C submits a formal flexible working request, changing their working pattern so they do not work Wednesdays. Worker C has changed to working four days per week and so is entitled to 80% of the normal annual leave and public holiday allocation. Worker C may be required to use some of their normal annual leave to cover all public holidays as the pro rata allocation may not be sufficient depending on which days some of the public holidays fall in a particular year.

Employers often prefer to calculate pro-rated annual leave and public holidays based on hours rather than days when looking at different working patterns. Taking this approach, a full-time worker (working a 5 day week of 37.5 hours) would be entitled to 60 hours of leave for the 8 public holidays recognised in England and Wales. A part-time worker, working 3 days a week for 22.5 hours would be entitled to a pro-rated public holiday allowance of 36 hours calculated by 22.5 / 37.5 x 60.

Compressed hour workers

Where workers work a fixed number of hours each week but not the same number of hours each day, the law does not specify exactly how to incorporate the minimum statutory holiday entitlement. Compressed hour workers will still be entitled to 5.6 weeks leave each leave year. Whilst a compressed hour worker is not part-time, as they may be working full-time hours, employers often adopt the same approach as part-time workers in calculating holiday entitlement based on hours.

Example:

A compressed hour worker works a 37.5-hour week over four days rather than five. Their annual holiday entitlement would be calculated as 37.5 x 5.6 weeks = 210 hours holiday. Based on the worker’s compressed hours of 9 hours a day, a day’s annual leave will be deducted at 9 hours from their total leave entitlement. On an initial consideration, this employee might suggest that such a calculation does not give them 28 days of annual leave – they would be right. The important point to understand is that the legislation provides for 5.6 weeks of time off and makes no reference to how many days that equates to – the calculation of days is something that is done within the workplace for the sake of convenience. Taking this example to its conclusion, if the employer were to allocate a full 28 days of leave, the individual, who only works 4 days per week under their compressed hours agreement, would receive 7 weeks of paid holiday.

What can employers do?

Employers should allow part-time/compressed hour workers to book their pro-rated public holiday entitlement as annual leave under their normal procedures. If a worker is scheduled to work on a public holiday, they should book this off as their normal leave. If a business is closed on a public holiday, an employer could require the worker to take annual leave if they are scheduled to work on that day by including this in their contract or by giving appropriate notice. If a worker does not normally work on a Monday or Friday, they can then choose to take their public holiday entitlement at another time during the leave year.

To ensure a consistent and fair approach and to avoid any claims of less favourable treatment, employers should adopt a clear policy and/or guidance for workers on how it deals with public holiday entitlement for part-time workers. Employers may also wish to review their current contractual provisions in relation to holiday entitlement for all types of staff across its workforce.